Consolidate Private Student Loans - Important Facts

By: Vesta Ricklefs

When you get out of college and hopefully begin your new career, loan payments can be very stressful. When you first take out student loans, you are usually operating under the idea that the fantastic career you will have will easily provide for the monthly payments you will have to make.

If only that was the way life worked. For most people, getting that job takes a while or even if they do get the career they were looking for, the pay does not start out as huge as they were expecting. The interest rates on your private student loans may make your head spin and keeping records on each and every one of them is almost like having another part-time job!

Choosing to consolidate private student loans can be a very good idea. When this is done, all those payments are combined into one and usually the interest rate is lower and fixed. The one payment is less than all the other payments were when combined. This type of consolidation can even be taken care of before the loans come due.

Consolidating your private student loans is almost always a good idea when you are starting out, providing you choose the right consolidation firm with which to do business and you have decent credit. If you have a poor credit score, the interest rate will be higher. However, if you can increase your credit score by 50 to 100 points, you will have a good chance of obtaining a consolidation loan with a lower interest rate.

There is a downside of course. The downside is that if you are making smaller payments you are going to have to pay for a longer period of time and because of the interest adding up, you will pay more than you would have originally paid before consolidation. Still, a lower monthly payment can make life easier by freeing up money to be placed in a savings account and/or used to pay other bills.

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